County bill seeks to collect fees from nonprofits

Karamagi Rujumba

Nov. 6, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- After years of talking about it, Allegheny County Council this week approved a plan to collect fees from tax-exempt entities such as the University of Pittsburgh Medical Center and Highmark, a move expected to raise as much as $13 million annually.

The bill, which is yet to be signed by County Executive Dan Onorato, was approved in a 14-0 vote Wednesday and is scheduled to take effect in January. It would create a "tax-exempt certification and essential services fee" for certain properties on which nonprofit organizations currently pay no taxes.

Councilwoman Amanda Green, D-Stanton Heights, was not present to vote on the bill.

According to Councilman Chuck McCullough, R-Upper St. Clair, who introduced the bill in March 2008, Allegheny County currently has about 25,000 properties classified as exempt from real property tax, yet their owners receive and benefit from county services such as public safety and public works.

In his proposal, Mr. McCullough said this bill is unlike previous county attempts to impose property taxes on nonprofit organizations.

"We are proposing to charge them a fee that has a relationship to the cost of providing services to them like fire and police protection and public works," he said.

Under his bill, which was co-sponsored by council members Bob Macey, D-West Mifflin, William Russell Robinson, D-Hill District, and Nick Futules, D-Verona, the county would impose a $200 fee for every 1,000 square feet of a structure on exempt land.

All city and county authorities will be exempted from the fees, and the county would apply the revenue from the fees to homeowner property tax relief by increasing the county's Homestead Exemption. The county currently exempts taxation on the first $15,000 of property value on a homeowner's primary residence.

But UPMC spokesman Paul Wood said this is yet another example of how its support of the city, county and the entire region "often goes unnoticed and under-reported."

"There's not another major, not-for-profit academic medical center anywhere in the United States that does more for its region than UPMC already does for Pittsburgh, Allegheny County and Western Pennsylvania," Mr. Wood said.

Among the county's benefits from UPMC, he said, is the $622 million Children's Hospital, which opened in May; 50,000 employees with nearly $100 million in state and local income taxes paid annually; and more than $24 million in property, parking and business taxes paid annually.

In addition, Mr. Wood said, the health provider continues to be the largest voluntary contributor to the Pittsburgh Public Service Fund.

Highmark spokesman Michael Weinstein offered similar sentiments even as he declined to comment because his organization has not yet seen the specifics of council's proposal.

"We are a significant economic engine for the county on a variety of fronts," he said.

The essential services fee is County Council's first significant effort to collect money from nonprofit organizations since a group of members went to Harrisburg in 2007 to lobby state legislators to allow the county to collect property taxes on nonprofits.

From 2005 to 2007, the city of Pittsburgh received $13 million from a number of nonprofit organizations, including UPMC. The same groups have so far volunteered to give another $5.5 million to account for the years 2008 to 2010, but City Council has so far taken no action to accept the donation.

And on Monday, Mayor Luke Ravenstahl is scheduled to submit his 2010 budget in which he proposes to raise $15 million through a mix of fees per college student, per hospital admission, on all-day parkers in public garages, or on water bills for educational and medical institutions.

Meanwhile, Mr. Onorato's administration yesterday declined to take a position on council's essential services fee plan.

"We can't comment yet because we haven't seen [the bill council approved] yet," said county spokesman Kevin Evanto. Mr. Onorato has plans to negotiate an annual $4 million in contributions to the county from nonprofit entities, Mr. Evanto added.

"When [Mr. Onorato] proposed his 2010 budget in September, he said this issue would be a cooperative conversation he wanted to engage in with the nonprofit community," Mr. Evanto said. "He wanted to have all of 2010 to negotiate a plan for contributions to start in 2011."

Now, Mr. Onorato must either approve council's plan, which would take effect in January -- a whole year before his plan that would collect three times less money -- veto it, or let it take effect without his signature.

But County Council President Rich Fitzgerald, D-Squirrel Hill, said that members who were incensed by the way UPMC handled its plans to close its hospital in Braddock most likely will override Mr. Onorato if he vetoes the bill.

"I think there was a bit of emotion on this with regard to the Braddock situation. We passed this bill by a 14-0 vote. We think it's worth taking a look at and we have decided to push for it," Mr. Fitzgerald said.

Karamagi Rujumba can be reached at krujumba@post-gazette.com or 412-263-1719.

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